El Dorado in the Commercial Court: Domestic Law, Foreign Law and Foreign Relations

17 July 2020

Why is a dispute between Mr Nicolás Maduro and Mr Juan Guaidó as the rival contenders to the Presidency of Venezuela being heard by the English Commercial Court? The answer involves US$1 billion of gold reserves held at the Bank of England and who has the authority to deal with them.

The recent decision in Deutsche Bank AG London Branch v Receivers Appointed by the Courtexplored the interface between domestic law, foreign law and foreign relations and the impact of the "one voice" and "act of state" doctrines.


The US$1 billion of gold reserves were held by the Bank of England for the Central Bank of Venezuela.  In addition, Deutsche Bank was obliged to pay the proceeds of a gold swap contract to the Central Bank of Venezuela in the sum of about US$120 million, being held by court appointed receivers.

Mr Maduro claimed to be the President of Venezuela on the ground that he won the 2018 presidential election and that the Board of the Central Bank of Venezuela appointed by him was authorised to give instructions to the Bank of England and to Deutsche Bank. Mr Maduro sought to repatriate the assets, which he claimed were required to fight the COVID-19 pandemic

Mr Guaidó claimed to be the Interim President of Venezuela on the grounds that the 2018 election was flawed, that on that account there was no President and that, under the Venezuelan Constitution, the President of the National Assembly, Mr Guaidó, was the Interim President of Venezuela, pending fresh presidential elections. He opposed the assets being returned to the Maduro regime.  Mr Guaidó claimed that an ad hoc Board of the Central Bank of Venezuela and a Special Attorney General, both appointed by Mr Guaidó as Interim President, were authorised to give instructions on behalf of the Central Bank of Venezuela to the Bank of England and to Deutsche Bank, respectively.

The Bank of England and Deutsche Bank needed to know which, if any, instructions they should obey.  Which appointee(s) had the requisite authority?

The answer turned on the "Recognition Issue" and the "Justiciability Issue".

The Recognition Issue

Had the UK Government recognised Mr Guaidó as Interim President of Venezuela? Was such recognition as Head of State or Head of Government; and was any such recognition conclusive pursuant to the "one voice" doctrine? 

The "one voice" doctrine requires the courts to accept as conclusive an unequivocal statement by the Government recognising a foreign sovereign state or the leader or government of a foreign sovereign state.  It is a prerogative power of the Crown, acting through the Government, to make statements of recognition, and the courts and the executive must speak with one voice.  A statement issued by the UK Foreign Secretary on 4 February 2019 was held to be recognition of the legal status of Mr Guaidó as President of Venezuela. This recognition was as Head of State and was held to be conclusive pursuant to the "one voice" doctrine.

The Justiciability Issue

The second issue was whether the Court could entertain any challenge to the validity under Venezuelan law of the legislative or executive acts by which the relevant appointments were (purportedly) made.  Mr Guaidó's submission was that neither his appointment of the ad hoc Board of the Central Bank of Venezuela and the Special Attorney General, nor the legislation under which those appointments were made, could be challenged in the English courts. Did the Court have to accept those executive and legislative acts as valid and effective without inquiry? 

Teare J held that various challenges to the validity of Mr Guaidó's appointments, and their legislative basis, were not justiciable because they sought to challenge acts of the Venezuelan state. The Court therefore lacked jurisdiction because of subject matter immunity.2  In a 2017 Supreme Court judgment on the "act of state" doctrine, Belhaj v Straw,Lord Neuberger PSC had identified three rules of the doctrine, two of which Teare J considered in detail in this context:

  1. courts will recognise, and will not question, the effect of a foreign state’s legislation or other laws in relation to any acts which take place or take effect within the territory of that state; and
  2. courts will recognise, and will not question, the effect of an act of a foreign state’s executive in relation to any acts which take place or take effect within the territory of that state. 

The most significant point of law in Teare J's decision was whether the second rule only applied to valid acts of the executive of the relevant state. The Supreme Court had not decided this issue in Belhaj.  Teare J followed the obiter remarks of Lord Sumption JSC in Belhaj, holding that the Court would not question the validity or effect of the relevant acts of Mr Guaidó as interim President of Venezuela even if they were unlawful or of no effect in Venezuelan law.


The Bank of England as a trusted repository for foreign national gold reserve assets will not have welcomed being caught in the political crossfire of this dispute, but the decision shows the English Commercial Court's "stakeholder" procedures in action, providing parties with the cloak of judicial authority for actions which would otherwise be of uncertain legality and lawfulness.

In the event of an appeal from this decision, the question of whether the "act of state" doctrine applies only in relation to executive acts which are valid under the domestic law of the relevant state is likely to feature prominently, as a point not decisively dealt with in the most recent Supreme Court authority on the doctrine.  Given the urgency with which the Commercial Court heard the matter, the higher courts may find themselves addressing this question sooner rather than later.

[2020] EWHC 1721 (Comm).

Teare J also considered whether the "one voice" doctrine precluded the Court from inquiring into the legality under Venezuelan law of the relevant executive and legislative acts, holding that it did so in respect of decisions of the Venezuelan Supreme Tribunal of Justice that were based upon the premise that Mr Guaidó was not interim President, but that further determination of this question was unnecessary.

3 [2017] UKSC 3, [2017] AC 964.

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